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BP p.l.c. – A Safe Bet for 2020 | $BP
BP p.l.c. (NYSE: BP) is a highly diversified Oil and Gas company with interests in multiple countries throughout the world, ranging from oil and gas exploration, transportation, storage, processing and marketing. Despite the long-term downturn in energy prices, BP has and will continue to have a strong financial footing to deal with any headwinds; unlike many of its smaller competitors, who have less diversification and are over-leveraged with debt.
The company trades at a reasonable 13.62 P/E ratio. BP also has a favourable rating from analysts with an average ‘Overweight’ rating and a $47.57 target price among 27 analysts that covered the company. During pre-market hours today, Wells Fargo analyst, Roger Read, upgraded the company to Overweight from Equal weight, and raised his price target to $46 from a previous $41. To add to his bullish stance, he also announced BP as a ‘Top Pick’.
When we look at the current political concerns throughout the world, it is difficult to see any outcome for energy other than prices going higher. Hopefully calmer heads will prevail in the Middle East, but until then, energy providers like BP are a good haven to hide out and get a very healthy 6.3% yield, while you wait for hostilities to calm down. Longer-term, BP looks like a great recovery trade, so let’s look at the charts for technical hints on the next move for the company.
When Examining the Monthly Chart for a Longer-term Perspective, Several Key Points should be considered:
- BP is within a rising channel; and the next move is to the top of that channel, having bounced nicely off the bottom.
- Long-term downtrend (blue) has been bac tested as support and held.
- Point of Control @ $41.52 is a critical level to cross.
- Fibonacci .236 retrace level first point of resistance to break above.
- Stochastic indicator has reset and is now in bullish reversal.
- Histogram is ticking higher and approaching zero line.
- MACD is attempting to reverse.
- Volume is increasing.
- The price has a long way to run higher for long-term investors.
For a Shorter-term View, let’s have a look at the 4-hr Chart.
- $40 looks like a nice point for entry above horizontal resistance.
- Volume has spiked with bulls in charge.
- Lower channel support has held strong.
- 7&12ma’s in bullish trajectory having crossed over the 34ma.
Targets to consider:
Short-term – $43.00 – Fibonacci Retrace Target
Medium-term – $52.00 – Mid-channel Resistance
Longer-term – $59.52 – Fibonacci Golden Pocket
A break above the $40 could possibly be a safe entry point for BP; above hourly horizontal resistance.
It must also be considered that this stock is quite overbought, so a pullback is highly possible in the near-term.